SOURCE: Michigan Retailers Association

May 23, 2007 09:12 ET

Michigan Retailers' Sales Forecasts Slip

LANSING, MI -- (MARKET WIRE) -- May 23, 2007 -- Michigan retailers are cooling their early summer sales projections.

Fewer than two in five now expect to increase sales during the next 90 days, a decline in optimism from recent months, according to the Michigan Retail Index, a joint project of Michigan Retailers Association (MRA) and the Federal Reserve Bank of Chicago.

The scaled-back forecasts follow a drop in sales during April.

"I believe the rapid rise in gasoline prices is having a negative effect on sales," said one retailer who responded to the confidential survey of MRA members.

"If it's this high now, I'm concerned about the public's planning for the summer months. Couple that with the state of the economy and I'm very concerned about retail sales for the next few months."

Larry Meyer, MRA chairman and CEO, said higher gasoline prices and Michigan's higher unemployment rate in April contributed to the drop in overall retail industry performance. He said retailers are telling him that the sharp rise in gasoline prices is cutting into their May sales as well.

The Michigan Retail Index showed that 35 percent of retailers increased sales in April over the same month last year, while 47 percent recorded declines and 13 percent saw no change. The results create a seasonally adjusted performance index of 39.7, down from 49.0, in March.

In addition, 38 percent believe their sales will increase for May-July, while 27 percent forecast declines and 29 percent project no change. The results create a seasonally adjusted outlook index of 49.8, down sharply from 57.1 in March.

The Michigan Retailers Association is the unified voice of retailing in Michigan and the nation's largest state trade association of general merchandise retailers.

Note: William Strauss, Senior Economist and Economic Advisor with the Federal Reserve Bank of Chicago, can be reached at 312.322.8151.

Michigan Retailers Association/Federal Reserve Bank of Chicago

Michigan Retail Index
April 2007 results
Index figures dating to July 1994 are available at
www.retailers.com/news/retailindex.html

April Performance
Retailers reporting increased, decreased or unchanged sales, inventory,
prices, promotions and hiring compared to the same month a year ago
(numbers in parentheses indicate March results)

            % Increased  % Decreased  % No Change  Index*       Responses
Sales       35 (43)      47 (38)      13 (15)      39.7 (49.0)  145 (146)
Inventory   27 (30)      24 (20)      39 (44)      43.2 (47.1)  137 (142)
Prices      32 (28)       8  (8)      52 (55)      56.8 (52.7)  141 (138)
Promotions  37 (35)       8  (6)      49 (51)      60.4 (60.8)  143 (140)
Hiring       9 (11)      12 (16)      67 (66)      41.7 (43.0)  134 (141)

Outlook for Next 3 Months
Retailers expecting increased, decreased or unchanged sales, inventory,
prices, promotions and hiring compared to the same period a year ago
(numbers in parentheses indicate March results)

            % Increased  % Decreased  % No Change  Index*       Responses
Sales       38 (49)      27 (20)      29 (26)      49.8 (57.1)  143 (144)
Inventory   22 (23)      33 (28)      37 (42)      38.0 (39.3)  140 (141)
Prices      30 (23)      10  (9)      51 (57)      55.3 (48.9)  139 (135)
Promotions  29 (34)       4  (8)      57 (44)      59.6 (55.2)  138 (131)
Hiring      11 (15)       9 (13)      66 (62)      42.5 (44.0)  131 (137)

April Sales Performance & Outlook
for Next 3 Months, by Region
(the first number indicates sales performance for the month; the number in
parentheses indicates outlook for the next three months)

                % Increased     % Decreased     % No Change
North           33 (22)         52 (41)         11 (29)
West            57 (63)         33 (10)          6 (27)
Central         13 (41)         64 (45)         18 (14)
East            16 (16)         50 (25)         25 (42)
Southeast       40 (36)         47 (24)         11 (36)

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